Chinese Spies Plead Guilty to Attempting to Steal Military Tech

Two Chinese nationals are facing 15 years in federal prison after pleading guilty in court to charges of attempting to obtain seven Maritime Raiding Craft and eight multi-fuel outboard engines and export them to China via a Hong Kong shell company, according to a recent Justice Department press release.

The two Chinese approached Gravious Aluminium Boats LLC, which operates under the name “Metal Shark” and attempted to procure seven of its 40ft Defiant model boats which have a military application. The Chinese buyers specced out the boats with eight Evinrude E-Tec G2 outboards. These are multi-fuel engines able to burn diesel, jet fuel (JP-4, JP-5, JP-8 Jet-A, and Jet-B), kerosene, biodiesel, and gasoline. They are hardened engines that can be dropped from aircraft or launched from submerged submarines. They have been in use by U.S. Special Operations Forces and are considered a Prohibited Export Item by the U.S. government.

The scheme was not very sophisticated. Ge Songtao, a Chinese national, used a female, U.S.-based employee named Yang Yang to approach Metal Shark and purchase the all-metal Defiant boats. Yang rejected the cheaper gas engines, which were standard equipment, and demanded the far more advanced Evinrudes. Instead of disclosing that the boats and engines would be going to Shanghai China, Yang falsely told the manufacturer that the items were being bought by a different one, a shell corporation set up in Hong Kong. Meanwhile back in Shanghai, Songtao moved a $110,000 deposit to a Hong Kong-based company which then paid Metal Shark and arranged for an agent to receive the boats, when they would arrive in Hong Kong, and transship them to China. Like it was routine. Yet, Metal Shark routinely reports the engines’ sale requests to the U.S. Department of Commerce for approval.

The Department of Commerce flagged the purchase request and looked into the purported buyer in Hong Kong. That ended up becoming a two-year, multi-service investigation conducted by the FBI, the U.S. Naval Criminal Investigative Service, the U.S. Department of Commerce – Bureau of Industry and Security, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives.

If you are wondering why the Navy’s Criminal Investigative Service was involved in this case, it’s because Yang Yang is married to a U.S. Naval Officer, Lt. Fang Yang.

Lt. Yang was assigned to the Maritime Patrol Reconnaissance Weapons School at Naval Air Station Jacksonville. This school trains aircrews on the P-8 Poseidon Maritime Patrol and Anti-Submarine Warfare platform. Lt Yang is now facing his own raft of charges under the UCMJ. Among the charges is procuring a firearm for the use of Ge Songtao while in the U.S. and for operating a consulting business in partnership with Songtao for the purpose of exporting equipment and material to China.

Military/Industrial Espionage basically.

This case was significant enough for the FBI to seek a FISA warrant (no doubt in part to protect classified information entered as evidence in the court record).

But some details of this case stand out:

Lt. Yang appears to have begun his involvement with Ge Songtao in China in 2008 while he was still an enlisted sailor, prior to his marriage to Yang Yang and prior to going to college and being commissioned as an officer. That’s a 12-year relationship. Lt. Yang also had a Top Secret security clearance. His relationship with a Chinese national was missed by investigators vetting him for that clearance as was his overseas bank account where Songtao was sending him his money. Lt. Yang even handed out business cards showing himself as a consultant working for a Chinese-based company. All missed by the government.

Ge Songtao, like all Chinese, may be presumed to be an agent or controlled asset of the Chinese Ministry of State Security.  China is a Communist country and as such its citizens get in just as much trouble saying the wrong thing to the government as they would for not saying the right thing to the government. Songtao would not keep to himself that he had befriended, compromised, and cultivated a U.S. Naval Flight Officer assigned to the training command for the premier anti-submarine warfare aircraft in the world. We do not share ASW tech or intelligence with anyone, not even NATO.

Songtao getting Lt. Yang to purchase him a firearm illegally is a classic tactic used by intelligence services to compromise and control an asset: The foreign agent gets his target to break the law in some meaningful way and if the asset refuses to cooperate or tries to end the cooperation, the agent is able to blackmail them into continued cooperation: “You committed a felony selling me that gun. If that is discovered you will go to prison. We have to protect each other,” or so the line goes. Songtao knew what he was doing.

Therefore, it is surprising they were so clumsy in attempting to buy the engines, which were their real target. The scheme was sloppy and amateurish. They almost seem dumb. When the U.S. built the SR-71 Blackbird, it needed an enormous quantity of titanium, since each 30-ton Blackbird had a 92 percent titanium composition. The problem was that the U.S. didn’t have titanium mines, but the Soviets did. They accounted for about 70 percent of the world’s production by the mid-1980s.

Determined to obtain a supply for the planes clandestinely, the CIA set up dozens of overseas shell corporations all over the world and bought small amounts of titanium telling the USSR the exported metal would be used for desalination plants, oil rig fittings, pumps, and valves. The CIA amassed hundreds of metric tons without the Soviets getting wise to it and then shipped them to Lockheed. The Soviets never suspected a thing. For decades we didn’t tell anyone what kind of metal the Blackbird was made of in order to keep the Russians in the dark about how we suddenly came into several hundred tons of titanium. One wonders if our security is so lax that Songtao and Fang did not feel the need to take elaborate precautions because they had been getting away with it for years?

Lastly, China as an industrial power has lots of branches missing from their Technology Tree, which represents branches of connected and complementary technological innovation and advancement that allow countries to build things like outboard engines that are water and pressure-proof and can run on almost any petroleum-based fuel. China makes quite a show of launching sleek-looking new ships and planes. But if it has to try to steal Evinrude’s outboard engines, this begs the question of how advanced could Chinese ships and planes really be.

Maybe this little-noted news item will answer the question:

In 2017, the Chinese Communists made the celebratory announcement that they had produced their first ballpoint pen using all Chinese made parts. Put for a moment aside joke headlines that go, “Madman Sells The Secret Of Ball-Point Pen To China!” and consider its implications. A country that has nuclear weapons, submarines and now aircraft carriers was unable to make a ballpoint pen on its own until 2017. U.S. commercial ballpoint pens date back to 1945. And why couldn’t China make a whole 99 cent pen on its own? It lacked the ability to make the tiny ball bearings at the tip of the pen. I wonder who helped China steal that technology?